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The US dollar slumped and the euro soared

22 Jul, 2020

Spot gold surged to a nine-year highest position

Data and news released yesterday:

The US confirmed cases of the coronavirus pneumonia reach 3 million 880 thousand, reaching 3,887,664, and the death toll exceeds 140 thousand, reaching 141,845.

The 27 member states of the European Union have reached an agreement on a fiscal stimulus plan to combat the impact of the new epidemic and revive the European economy.

The US President Trump's advisory team and senior members of the Democratic Party of Congress will discuss the next steps to deal with the coronavirus pneumonia. Republican members said that they are studying a $1 trillion aid bill.

Mr. McConnell, leader of the majority party (Republican Party) of the US Senate: it is estimated that the stimulus bill cannot be completed next week. There are different opinions on the issue of salary tax cuts. The next stimulus bill will be introduced in the next few days.

The API report: US crude oil inventory increased by 7.544 million barrels to 531 million barrels last week.

The Daily Telegraph: the British government's assumption is that it is impossible to reach a Brexit agreement. However, if the EU makes concessions in the autumn, it is still possible to reach a "basic" trade agreement.

 

Market Volatility:

The U.S. dollar index fell 0.6% to a lowest position of 95.14, down nearly 80 points from its daily lowest position, sliding for the third day in a row, hitting a low of about 95.04 since March 10.

The euro rose 0.8%, the biggest one-day increase in two weeks; the euro rose to around 1.1540, the highest level since January 11, 2019; the EU countries reached an agreement on a large-scale stimulus plan.

The pound rose 0.55% to around 1.2731. After British Prime Minister Johnson announced a new round of lifting measures, the market also renewed confidence in the prospect of Brexit transition negotiations between Britain and the EU.

The USD/JPY fell 0.44% to around 106.80, rebounded from the new week lowest position of 106.69, but remained in the range of 106.00-108.00.

Spot gold surged to a nine-year highest position, and long-positions took advantage of the $1840 barrier. Today's morning trading above $1860, gold benefited from loose monetary policy, low real yield, record capital inflow of gold ETF and increase of asset allocation.

The WTI September crude oil futures rose by 1 US dollar, or 2.44%, to settle at US $41.92/barrel; Brent's September crude oil futures rose by 1.04 US dollars, or 2.40%, to US $44.32/barrel.

 

Future forecast of CWG:

On this trading day, the data of Asia Europe market was light; in the US market, the sales of completed houses after the quarterly adjustment of NAR in June in the United States and the changes of crude oil inventory in EIA of the United States last week were announced. In addition, the core consumer price index of Canada in June was released. Meanwhile, European Central Bank President Christine Lagarde also delivered a speech in the evening.

Institutional Analysis: according to the research report released by Deutsche Bank, the euro / dollar is expected to rise to 1.20 in the next few months, and the recovery fund will have an effect. The bottom line is that the market will react quickly from the euro zone recovery fund. Euro zone leaders and market participants are on the verge of a summer holiday, and if there is a divergence in the data, portfolio adjustments will lead money into the eurozone, helping the euro rise against the dollar in the coming weeks or months.

 

Financial calendar:

Economic data:

20: 30 Canada's June core CPI

22:00 home sales after NAR quarterly adjustment in June

22:30 US EIA crude oil inventory changes last week

Central Bank News:

21:15 European Central Bank President Christine Lagarde will deliver a speech

 

CWG financial knowledge:

Sales of completed homes after NAR quarterly adjustment (annualized monthly rate): the National Association of Realtors (NAR) announced that the sales of completed houses are preliminary estimates of the U.S. housing market. The data include used home sales and prices across the United States and four regions. Condominium, condominium and condominium types. This data evaluates the current commercial situation of the housing market. If the published data is better than expected, it will be good for the US dollar, otherwise, if the published data is lower than expected, it will be negative for the US dollar.